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Even before ride-hailing giant Uber has gained a foothold in B.C., it has fundamentally shifted the economics of the taxi industry, causing a precipitous plunge in the value of taxi licences.

On Tuesday, the Vancouver Taxi Association and Yellow Cab Co. acknowledged that licences that once commanded nearly a million dollars each have little value because of the uncertainty Uber has created in the marketplace.

Moreover, they expect that when ridesharing is eventually permitted in B.C. there will be a defection of taxi drivers to Uber and similar companies, a phenomenon experienced in many other jurisdictions.

At the same time, Peter Fassbender, the minister responsible for TransLink, says he’s watching events in Alberta closely.

On Monday, Alberta Transportation Minister Brian Mason rejected Uber’s request that its drivers not be required to have Class 4 commercial licenses. He also insisted they will need to pass criminal records checks. That province also won’t have insurance regulations in place before July 1. Uber responded by suspending its Edmonton operations until that time, even though Edmonton has a bylaw allowing it to operate.

Fassbender and Transportation Minister Todd Stone have said they want to modernize B.C.’s passenger transportation industry before allowing Uber and other car-hire operators to move into B.C., which remains the largest jurisdiction in North America without such services.

They have also said they won’t tolerate Uber’s methods in other jurisdictions, where it launched illegally and used public pressure to force changes to transportation laws.

But even without a single Uber driver operating in B.C., the company has already shaken the foundations on which the conventional taxi industry rests.

Just three years ago, taxi licences in Vancouver were worth $800,000 to $1 million, largely due to the restricted supply. Those prices essentially guaranteed drivers’s investment in a cab and a job. They are heavily underpinned by home and business mortgages.

But now, as in many cities where Uber has targeted its ride-hailing app, Vancouver’s taxi licence system is in disarray.

“There are at least 100 licences on offer for sale. But there is no value at all at the moment,” said Kulwant Sahota, the president of Yellow Cab, the largest of Vancouver’s four taxi companies. “There is no certainty happening here. People are scared.”

Carolyn Bauer, the president of the Vancouver Taxi Association and general manager at Yellow, said Fassbender has assured cab drivers that the province wants the taxi industry to remain viable.

“It is the uncertainty of not knowing if Uber does come, will there be a cap on their numbers. People don’t want to invest (in taxis), whether it is $150,000 or $200,000. They don’t want to put the money up because there is no guarantee they will make money in their job,” she said.

Neither Bauer nor Sahota could say what a licence is now worth. But they pointed to a case in Toronto where a driver who paid $350,000 a few years ago for a medallion — a licence — can’t get $35,000 for it now.

Uber and competitors like Lyft have also been draining away taxi drivers. In places like New York, Pittsburgh, San Francisco and Chicago, drivers have attracted to Uber by easier or better hours, promises of better pay and reduced costs. One New York company lost 40 per cent of its drivers.

Sahota said Vancouver taxi companies are expecting defections. Earlier this week he was told that there are at least 73 drivers in Metro Vancouver who want to switch to Uber.

“There will be an impact. I won’t tell you that there won’t be an impact. Drivers have nothing to lose switching over, finding out if Uber comes to town. Anyone would (try it),” he said.

Bauer said that in some U.S. cities drivers have returned to conventional taxis after becoming disenchanted with Uber. “What we have found out is that drivers who left to go with Uber thinking that they would make money soon realized they weren’t making the money because there was so many Uber drivers out there and they wanted to come back to the regulated taxi because they could guarantee themselves a proper wage,” she said.

Dave Sutton, a spokesman for “Who’s Driving You?”, a public information campaign by Maryland-based Taxicab Limousine and Paratransit Association, said many defecting taxi drivers returned after discovering they weren’t making full-time incomes.

“The long time professional drivers will look at this and say “wait a minute, this isn’t making any sense. The costs are too much,” said Sutton. “We’ve seen a lot of Uber drivers move back over to the traditional taxi model because the numbers make much more sense.”

Uber spokeswoman Susie Heath said a study done for Uber shows that at least one in five of its drivers come from taxis or private limousines. She said the company was encouraged by a recent Vancouver Board of Trade report that called for distinct provincial rules reflective of the Uber business model.

“We are hopeful that Premier (Christy) Clark and the provincial government will say yes to ridesharing and move forward on new regulations this spring so that British Columbians in Metro Vancouver, Victoria, Kelowna and other municipalities are able to experience the benefits of ridesharing,” she said in a statement.

Heath noted at least five B.C. municipalities — Vancouver, Langley, Port Moody, Coquitlam and Port Coquitlam have said they would like the province to show leadership on the issue and that in a recent poll 76 cent of Metro Vancouver residents strongly supported services that connect passengers with private drivers.

But Fassbender said neither he nor Stone will be pushed into making a quick decision.

“This is a process we are going to go through and will take as much time as we need to do it right,” he said. “We will do it right and we will have a level playing field.”

Asked if he was concerned Uber will grow impatient, Fassbender said he’d already told them “you do not want to make us an adversary.”

“I would say this. I think Uber has to recognize that the province of B.C. is different because of our insurance regime and a number of things and they need to recognize they need to work with us, not to challenge us by doing something that would force us to take a different stand,” he said.

Heath said Uber’s decision to temporarily suspend its Edmonton operations because of the lack of insurance rules from the province “is very unique to Edmonton and Alberta, and has no impact to services outside that city.”

But Fassbender said Edmonton’s decision to approve a ride-hailing bylaw before provincial regulations had been approved is exactly what he doesn’t want to happen in B.C.

“We are looking at what happened in Alberta where individual cities started to move in a particular direction without an understanding of the bigger picture in the province of issues like insurance,” he said. “It put a little bit of the cart before the horse. Now the horse has been put back in the barn while Alberta deals with some of the important things we already recognize we need to do.”

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Even before Uber arrives in B.C., it has the taxi industry in disarray

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